TOKYO, March 25 (Reuters) – Sony Corp is counting
on the boom in smartphones and the market’s voracious appetite
for megapixels – vital to better quality video calls and
“selfies” – to sustain the double-digit revenue growth in its
image sensor business.
Imaging – both cameras and sensors – is one of three pillars
along with Xperia smartphones and PlayStation consoles that the
company is leaning on to stop the haemorrhaging at its flagship
electronics division. Sony expects its sales of imaging sensor
chips to jump 16 percent to 360 billion yen ($3.52 billion) in
the year ending this month.
Sony dominates the imaging sensor segment. Its high-end
imaging chips are the “film” in the main cameras of both Apple
Inc’s iPhone 5S and Samsung Electronics Co Ltd’s
Galaxy 4, according to a break-down analysis of
Sony has had little business selling lower-quality sensors,
which are typically used in front-facing cameras, said Yutaka
Okamoto, president of the company’s device division.
But now, some smartphone makers are upgrading their
front-facing cameras for users who want sharper self-portraits,
and that has opened up a whole new market for Sony, Okamoto
Several fast-growing Chinese smartphone makers, keen to move
upmarket, are also beginning to put in orders for Sony’s
high-spec chips, he said.
The division could get an even bigger profit boost from its
nascent business making high-margin camera modules, which
include lenses and circuitry as well as sensors, while tablets
as well are joining the bandwagon towards more megapixels and
Despite its lead in sensor technology, however, Sony faces a
rising threat from a familiar rival – Samsung Electronics. The
South Korean tech giant has hammered Japanese electronics makers
in businesses from TVs to memory chips.
Samsung’s newest flagship smartphone, the Galaxy S5, is due
to be fitted with an image sensor developed and manufactured
in-house by the South Korean company, with Sony no longer the
“Our strength – and Samsung’s – is that we can accumulate
expertise on our own production lines,” Okamoto said.
“The fact that Samsung makes their own products on their own
line with their own technology, that’s a threat,” he told
Reuters in an interview last week.
Sony is looking to expand its sensor production capacity
next year with a factory in northern Japan it agreed to buy from
struggling chipmaker Renesas Electronics Corp for a
total investment of 35 billion yen ($342 million) including new
Sony has calculated that capacity at its existing factories
would be unable to keep up with demand by mid-2015, even with a
drop in demand for compact camera sensors, Okamoto said.
Sony and smartphone memory chip maker Toshiba Corp
are the only big Japanese chipmakers expanding production, while
Renesas has restructured to focus on automotive chips and
Panasonic Corp has sold most of its chip plants to
Elpida Memory, Japan’s last maker of PC memory chips, was
bought by Micron Technology last year after seeking
Sony says its image sensor business is turning a profit,
while other major divisions such as TVs and PCs are in the red
and the company as a whole expects a 110 billion yen net loss
for the year to March 31.
Macquarie Capital Securities director of research Damian
Thong estimates the sensor business earns an operating margin of
10 to 15 percent.
Sony says its global market share for smartphone image
sensors is at 44 percent, mainly in the back-facing cameras used
to snap photos. Screen-side sensors tend to be of lower quality,
and that market is led by Omnivision Technologies Inc,
the No.2 in market share. Samsung is third, according to Techno
Systems Research Co, a Tokyo-based market researcher.
As Sony grabs more sensor business in screen-side cameras
and in Chinese smartphones from fast-growing manufacturers such
as Xiaomi that tout high-end, made-in-Japan parts as a selling
point, Sony’s device business is increasingly tied to the
But Okamoto plays down worries that smartphone growth might
peak out within the next few years, citing a number of other
promising markets for image sensors.
“Our hope is that wearables are next. We also expect to see
increasing demand for sensors used in medical devices, autos,
and in agriculture,” he said.
($1 = 102.2350 Japanese Yen)
(Editing by Edmund Klamann and Ryan Woo)
(c) Copyright Thomson Reuters 2014. Click For Restrictions – http://about.reuters.com/fulllegal.asp